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The Pure Theory of Multilateral Obligations

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  • Urs Schweizer

Abstract

This paper develops the pure theory of damage rules that internalize external effects in a multiparty setting. Desirable properties in terms of efficiency are shown to follow from a simple saddle-point property, which, in turn, is implied by general principles of liability. The legal practice of granting compensation of negative but not positive effects turns out to be consistent with the saddle-point property. The sharing of damage payments among several injurers is not restricted by efficiency considerations. For sequences of events that follow an injury, the pure theory would grant recovery even to parties that suffer at the far end of the sequence.

Suggested Citation

  • Urs Schweizer, 2005. "The Pure Theory of Multilateral Obligations," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(2), pages 239-254, June.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200506)161:2_239:tptomo_2.0.tx_2-m
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    Citations

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    Cited by:

    1. Schweizer, Urs, 2006. "Legal Damages at Uncertain Causation," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 160, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    2. Susanne Ohlendorf, 2009. "Expectation Damages, Divisible Contracts, and Bilateral Investment," American Economic Review, American Economic Association, vol. 99(4), pages 1608-1618, September.
    3. Schweizer, Urs, 2007. "Tortious acts affecting markets," International Review of Law and Economics, Elsevier, vol. 27(1), pages 49-69, March.
    4. Christoph Engel & Urs Schweizer, 2005. "Editorial Preface," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(2), pages 191-192, June.
    5. Schweizer, Urs, 2009. "Legal damages for losses of chances," International Review of Law and Economics, Elsevier, vol. 29(2), pages 153-160, June.

    More about this item

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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